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instead viewed as a commodity, investment, and strategic resource (Olsen, 2007). Instead of shaping and designing the system, the state tends to promote competition, while ensuring quality and transparency (Phillip, 2000, Ferlie et al., 2009). Accordingly, competition among buyers (students) and sellers (HE institutions) is assumed to assure greater discipline in institutional decisions regarding expenditures and the ‘education product’, as it is believed to facilitate institutional adaptation and innovation (Dobbins et al., 2011). HE marketization may include privatization, although this is not invariably the case (Dobbins et al., 2011). At the same time, market-oriented systems may offer governments an array of policy instruments to enhance competition such as regulations on subsidies and instruments affecting pricing structure and enrolment (e.g. competitive admissions, price ceilings) (Dobbins et al., 2011). The American system, in particular, is known for taxation incentives for families who invest in children’s education or for corporations who make donations to HE institutions (Olsen, 2007). Hence, government involvement entails regulation and incentives for competition and quality, rather than directives, legislative decrees, or manpower-based planning (Olsen, 2007, Niklasson, 1995) However, institutions remain financially dependent on external stakeholders such as private and business donors as well as students, the ultimate beneficiaries of HE. As a result, research and teaching services are “sold” for competitive prices on the market (Marginson and Considine, 2000).
Along the same lines, universities are likely to be more susceptible to special interests as they find themselves in a delicate position of dual accountability towards the state/public sector and market demands (Dobbins et al., 2011). In other words, public authorities penetrate vertically into HE systems to assert leverage over the structure of academic markets, while market forces horizontally “inject” consumer demands into the system (t’Veld et al. (1996), leading to increased conflict potential.
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South African businesses operate. Corporate governance functions under challenging economic climate globally and hard conditions nationally. Corporate governance is viewed differently in South Africa – as some people refer to it as the responsibility of the board of directors overseeing organizations; managing relations between the organization and its stakeholders;
financial and fiduciary duties including legal obligations; crafting and execution of strategy – giving rise to finance growth as well as monitoring and evaluation; and risk awareness (Mallin, 2011).
Mallin (2011) acknowledges the fact that all these aspects are valid and reiterates that they should not be divorced from country’s socio-political background. South African business background has been heavily influenced by major stakeholders who include – government;
civil organizations; media; shareholders; companies and trade unions (Mallin, 2011). Mallin (2011) note and appreciate one of the most influential initiatives in developing practices and concepts of corporate governance which have been outlined in all three King Reports – offering guidelines and principles for best practice; including environmental and social responsibility.
A well governed tertiary institution will enhance its human resources management principles and practices, strengthen financial management strategies adopted by the institution, increase research productivity levels which will mean more investment or additional funding to sustain the institution, attract best researchers globally and be institution of choice for learners (Crowther, 2010). Tertiary institutions in South Africa are faced with a challenge of transforming academia such that it produces adequate African professors to close the scare skills gap (National Government, 2014). The continuous development of effective and efficient governance structures within institutions will eventually set the tone and society will slowly regain confidence towards their own products and refrain from mentality that South African institutions are not of high quality (National Government, 2014).
According to Hough.; et al. (2010) corporate governance framework is merely a combined assurance process as illustrated in figure 2.1 below:
25 Figure 2-1 Corporate Governance Framework
Source: (Hough.; et al., 2010)
Hough.; et al. (2010) state that corporate governance framework is a process of combined assurance. Accordingly, Hough.; et al. (2010) notes that management, internal assurance providers such as internal audit and external assurance providers (such as external audit) are role-players in providing assurance to the board over risks in an enterprise. According to National Government (2014) King III tasks the audit committee with the responsibility of monitoring the appropriateness of the company’s combined assurance model and ensuring that significant risks facing the company are adequately addressed.
According to Stromquist and Monkman (2014) combined assurance model is a process in place meant to effectively coordinate management; internal and external assurance providers; increase their collaboration and develop a shared and more holistic approach of the institution’s risk profile. Combined assurance teaches everyone that they are responsible for the effective and
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efficient functioning of their institution. As illustrated in Figure 2-1, no section or department can function in a vacuum – there will always be a link in one way or other. For example, effective corporate culture will give rise to good ethical leadership who conduct themselves with a profession manner at all times. Compliance requirement will mean employing people with legal expertise in a highly controlled environment. Combined assurance further recognises that each and every business requires ethical people, reliable systems and effective processes in order to carry out its operations (Kiel and Nicholson, 2003).
The results of operations are interpreted through integrated reporting other results of healthy operating businesses are documented by the way of accountability – where employees take charge of their actions. Fully accountable employees’ produces tremendous results to its clients.
Furthermore, to measure performance, Figure 2-1 illustrates that there should be policies and authorised structures which will be responsible for driving the strategy of the organisation. The strategy of the organisation entails purpose of the organization’s existence; the values that it upholds to the society and the goals that the organization wants to achieve by being in a particular business (Hough.; et al., 2010).
HEIs have been largely viewed as social institutions and that other than their core functions of being a community for scholars to perform research through teaching and learning as well as community engagement – they are also expected to shift focus and concentrate on social activities which include maintenance and rebirth of values and norms of the society (Godemann et al., 2014). Well governed HEIs are encouraged because they become the society’s source of building their careers. Well educated society give rise to economic development then people start getting descent jobs, unemployment rate decreases, the cost of living becomes affordable, and poverty crises are also addressed.